Governor Hochul Executive Budget Climate Funding

Recently I described the status of the New York Cap-and-Invest Program (NYCI) and reactions to the decision to delay its implementation.  In the 2025 State of the State address Governor Kathy Hochul announced a $1 billion climate investment.  This post describes the references to climate in the FY2026 NYS Executive Budget Book that described Hochul’s budget for the next fiscal year.

I am convinced that implementation of the New York Climate Leadership & Community Protection Act (Climate Act) net-zero mandates will do more harm than good if the future electric system relies only on wind, solar, and energy storage because of reliability and affordability risks.  I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 490 articles about New York’s net-zero transition.  The opinions expressed in this article do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  It includes an interim 2030 reduction target of a 40% GHG reduction by 2030. The Climate Action Council (CAC) responsible for preparing the Scoping Plan to “achieve the State’s bold clean energy and climate agenda” recommended a market-based economywide cap-and-invest program. 

The program is supposed to work by setting an annual cap on the amount of greenhouse gas pollution that is permitted to be emitted in New York: “The declining cap ensures annual emissions are reduced, setting the state on a trajectory to meet our greenhouse gas emission reduction requirements of 40% by 2030, and at least 85% from 1990 levels by 2050, as mandated by the Climate Act.”  The prevailing perception of NYCI is exemplified by Colin Kinniburgh’s description in his recent article in New York Focus.  He describes the theory of a cap-and-invest program as a program that will kill two birds with one stone.  “It simultaneously puts a limit on the tons of pollution companies can emit — ‘cap’ — while making them pay for each ton, funding projects to help move the state away from polluting energy sources — ‘invest.'” I described questions about NYCI that I believe need to be resolved here.

Stopgap Climate Funding

According to a Perplexity AI search: Governor Hochul announced a $1 billion climate investment as part of her 2025 State of the State address. This investment, described as the single largest climate investment in New York’s history, aims to address the climate crisis and achieve a more sustainable and affordable future for the state.  The $1 billion funding package includes:

• Retrofitting homes and incentivizing heat pump installations
• Building sustainable energy networks, including thermal energy upgrades at SUNY campuses
• Expanding green transportation options
• Supporting businesses in their decarbonization efforts

I concluded in the previous articles about NYCI that the costs were incompatible with the political narrative that Governor Hochul is concerned about affordability.  At the Energy Access and Equity Research webinar sponsored by the NYU Institute for Policy Integrity on May 13, 2024 Jonathan Binder stated that the New York Cap and Invest Program would generate proceeds of “between $6 and $12 billion per year” by 2030.  That certainly would have increased costs for New Yorkers but it also was a primary source of revenue for the emission reduction strategies necessary to meet Climate Act targets.

Colin Kinniburgh’s description in a recent article in  New York Focus described the last-minute decision to delay NYCI implementation.  Kinniburgh described the reaction of the environmental justice community:

It is not clear where that funding would come from — whether it would be new or “cannibalizing other existing funding sources,” in the words of Stephan Edel, executive director of the climate justice coalition NY Renews.

Even if it is entirely new funding, $1 billion would be considerably less than the $3 billion or more the state had expected to raise in the first year of the cap and invest program.

“We don’t want a band-aid solution here,” Courtin said. “We need a long-term, sustainable funding solution.”

He noted that Hochul explained that more data was necessary to design the program well.  “I’m not walking back on all of our commitments… I’m not letting these projects go unfunded,” Hochul said, referring to the stopgap $1 billion in climate funding she announced on Tuesday. 

Fiscal Year 2026 Executive Budget

The press release for Governor Hochul’s executive budget was captioned “More money in your pocket”.  There are specific recommendations in the FY2026 NYS Executive Budget Book (Budget Book) for programs including the $1 billion in climate funding.  Given the dynamic between Hochul and the environmental organizations upset at the pause in NYCI I searched the Budget Book for the work climate to see how she planned to appease them.  The complete search is at the end of this article.  Here are some highlights.

The Hochul Administration continues to invoke the existential threat of climate change as a driver for budget planning.  They do not understand the difference between weather and climate.  They attribute every extreme weather event to climate change with the implication that reducing emissions will alleviate those weather conditions.  Climate change was listed as a financial risk in several places.  

The Budget Book also claims that New York is “leading the nation:

From the beginning of her administration, Governor Hochul has made it clear that responding to climate change remains a top priority for New York State. Acknowledging that the cost of inaction greatly outweighs the cost of any actions we can take together, New York will continue to pursue an aggressive agenda in transitioning to a sustainable green energy economy, in a way that is both environmentally effective and economically affordable for all New Yorkers.

The slogan that the costs of inaction are greater than the costs of action has been the mantra of the Administration regarding costs.  However, that statement is misleading and inaccurate as I documented in my verbal comments and in my written comments on the Draft Scoping Plan.  I described the machinations based on reality used to mislead and harm New York as a shell game in a summary post. 

In brief, one reason that this claim is a shell game is that the cost estimate everyone wants to know is how much it is going to cost to achieve all the New York “Net Zero” targets (85% reduction in GHG emissions and 15% offset of emissions) by 2050 and all the other mandates in the Climate Act.  The Scoping Plan cost estimates only include a subset of the total costs by excluding costs of programs that are needed to meet the Climate Act targets but were implemented before the Climate Act was passed.  The argument is that the “already implemented” projects were not mandated by the Climate Act itself so they are not included.

This is a political document, so it is not surprising that the Budget Book bragged that:

Governor Hochul is directing New York to embark on the single-largest climate investment in the history of the state budget, directing over $1 billion in new funding towards achieving a more sustainable future. This landmark investment will generate new jobs, help reduce household energy bills, and cut down on harmful pollution and its impacts on our families.

What is missing is the specifics about the expenditures.  The $1 billion is intended to “reduce the State’s carbon emissions by building out thermal energy networks at SUNY campuses, making clean energy investments in State-owned buildings, retrofitting homes and incentivizing the installation of heat pumps, expanding green transportation options across the State, and supporting businesses of all sizes in their decarbonization journey.”

I asked Perplexity AI how many buildings does New York State own.  The response said it was not possible to provide an exact number but noted that the Office of General Services manages 22 state office facilities.  A quick check indicates that the NYSERDA office building is not listed so I believe that the buildings used by the various state authorities are not included. There are 64 SUNY campuses.  I went to school at one and it had a thermal energy system.  I suspect that is the rule and not the exception.  Presumably the plan is to convert all those systems to zero carbon emissions.  In round numbers there are 100 buildings and campuses operated by New York State.  I would not be surprised if the average price to convert is at least $10 million.  To convert them all would cost a billion dollars.

The bottom line is that the one billion dollars is just a fraction of the amount needed to reduce carbon emissions as needed to meet the Climate Act targets.

Discussion

The Climate Act requires the State to invest or direct resources in a manner designed to ensure that disadvantaged communities receive at least 35 percent, with the goal of at least 40 percent, of overall benefits of spending.  Last year’s NYCI proposal included carveouts from the proceeds for this mandate. 

Hochul is being pilloried for delaying implementation of NYCI and the distribution of these funds.  The Climate Justice Working Group has” had an important advisory role in the Climate Action Council process, providing strategic advice for incorporating the needs of disadvantaged communities in the Scoping Plan.”  That process is in disarray.  I have been told that there was a working group meeting recently but could not find any announcement for the meeting or other descriptive documentation.  I also found out that three prominent members of the Working Group resigned because Governor Hochul was not moving ahead fast enough.

Against that backdrop Hochul’s announcement of the $1 billion, the single-largest climate investment in the history of the state budget, appears to be a bid to maintain her credibility with the environmental justice political constituency.  In my opinion, this demographic will never be happy.  The leaders of the movement require a problem for their business model to succeed.  They never can admit that the problem is solved or even progressing satisfactorily because then the reason for their organization to exist disappears.  Keep in mind that a common recommendation in all the funding proposals is for local control of how the proceeds will be invested and who better to provide that expertise than the members of the Climate Justice Working Group.

Conclusion

Reality bats last.  The reality that the Climate Act transition has affordability and reliability issues can no longer be ignored by Progressive Democrats.  I believe that they are insurmountable issues, but it is now apparent that even Governor Hochul has recognized that costs are an issue.  The slogan that the costs of inaction are more than the costs of action does not resonate as it becomes obvious that the costs to New Yorkers are real and significant.  When the public figures out that the benefits are biased and mostly imaginary, the illusion will be completely shattered.  Hochul’s re-election campaign is coming to grips with the reality that voters are not going to be mollified by any political slogan.  Stay tuned.

Addendum – Budget Book references to Climate

FY2026 NYS Executive Budget Book

In the Financial Plan Review on Page 16:

At the same time, uncertainty looms. Risk as varied as policies and plans of the new Federal administration, the potential for a slowdown in economic growth, geopolitical risks, the ongoing implications of climate change, and sustained trends of rising enrollment and costs in public health insurance programs all present the potential for fiscal challenges in the future.

In the discussion of Reserves and Risks on Page 24:

The Financial Plan faces ongoing economic risks, including: slowing economic growth; continued price inflation; geopolitical uncertainties; immigration policy; climate change and natural disasters; programmatic cost pressures; uncertainty about the fiscal conditions of outside entities relying on State assistance; risks due to the State’s dependence on Federal funding and approvals; and possible policy changes under the new Federal administration.

In the discussion of Climate Change Adaptation and Mitigation on Page 31:

The Executive Budget includes funding to protect our environment and make our future more sustainable; supporting New York’s ability to adapt to everchanging climate effects and mitigate damage from extreme weather events, including: 

• $1 billion to reduce the State’s carbon emissions by building out thermal energy networks at SUNY campuses, making clean energy investments in State-owned buildings, retrofitting homes and incentivizing the installation of heat pumps, expanding green transportation options across the State, and supporting businesses of all sizes in their decarbonization journey;
• $78 million for coastal resiliency projects;
• $30 million increase in Green Resiliency Grants to support flood control infrastructure projects;
• $50 million to support sustainability in New York’s dairy industry, and
• $50 million to bolster the Resilient and Ready program, which will support low and moderate income homeowners with resiliency improvements and assist with repairs in the event of a catastrophic event.

In the discussion of Federal Infrastructure, Energy and Manufacturing Investments Page 44:

Federal investments included in the Inflation Reduction Act (IRA) are providing funding to address the climate crisis, lower utility costs, and lower emissions.

The next four references were in the section titled “Environment, Energy, and Agriculture”.

Page 60:

New York State’s environmental, energy and agriculture agencies are on the front lines of the ongoing fight against climate change; are tasked with conserving and protecting precious natural resources; promoting New York State as a natural destination for tourism and recreation; ensuring the integrity of freshwater resources; and supporting the kind of agricultural development that is critical to New York State’s robust farming industry.

Page 60:

Leading the Nation

From the beginning of her administration, Governor Hochul has made it clear that responding to climate change remains a top priority for New York State. Acknowledging that the cost of inaction greatly outweighs the cost of any actions we can take together, New York will continue to pursue an aggressive agenda in transitioning to a sustainable green energy economy, in a way that is both environmentally effective and economically affordable for all New Yorkers.

Page 61:

Proposed FY 2026 Budget Actions

In addition to announcing critical new programs and advancing new investments related to climate change, Governor Hochul’s proposed budget will provide the funding New York needs to preserve, protect, and enhance our natural resources, expand our outdoor recreation opportunities, and drive economic growth through sustainable agriculture and eco-tourism. Highlights of the FY 2026 Executive Budget include:

Historic Climate Investment.

Governor Hochul is directing New York to embark on the single-largest +climate investment in the history of the state budget, directing over $1 billion in new funding towards achieving a more sustainable future. This landmark investment will generate new jobs, help reduce household energy bills, and cut down on harmful pollution and its impacts on our families.

Decarbonizing State Government.

An additional $50 million is included to support New York’s ongoing efforts to reduce its own carbon footprint. This continued investment will accelerate State facilities’ decarbonization efforts and provide resources to initiate procurement practices that prioritize sustainable and climate-resilient design initiatives.

Environmental Protection Fund.

$400 million for the Environmental Protection Fund (EPF) is again provided to support critical projects that work to mitigate the effects of climate change, improve agricultural resources, protect our water sources, advance conservation efforts, and provide recreational opportunities.

In the section Supporting the NY State of Health on Page 76:

Expand Access to Air Conditioning Units.

The escalating threat of climate change poses significant risks to public health. Climate-induced health risks, such as extreme heat, can both exacerbate existing health conditions and contribute to new health issues. The Budget adds to a FY 2025 Enacted Budget action which provided air conditioning units for Essential Plan enrollees with persistent asthma by expanding eligibility for additional conditions exacerbated by heat such as diabetes, cardiovascular disease, heart disease and hypertension.